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EXHIBIT 10.1
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT is entered into as of this _____
day of March, 1999, by and between NextCard, Inc., a Delaware corporation, (the
"Company"), and _________________ ("Indemnitee").
RECITALS
A. The Company is aware that because of the increased exposure to
litigation costs, talented and experienced persons are increasingly reluctant to
serve or to continue to serve as directors and officers of corporations unless
they are protected by comprehensive liability insurance and indemnification.
B. The statutes and judicial decisions regarding the duties of directors
and officers are often difficult to apply, ambiguous, or conflicting, and
therefore fail to provide such directors and officers with adequate guidance
regarding the proper course of action.
C. The Company believes that it is fair and proper to protect the
Company's directors and certain of its officers, from the risk and judgments,
settlements and other expenses which may occur as a result of their service to
the Company, even in cases in which such persons received no personal profit or
were not otherwise culpable.
D. The Board of Directors of the Company (the "Board") has concluded
that, to retain and attract talented and experienced individuals to serve as
officers and directors of the Company and to encourage such individuals to take
the business risks necessary for the success of the Company, the Company should
contractually indemnify its officers and directors, in connection with claims
against such officers and directors in connection with their services to the
Company, and has further concluded that the failure to provide such contractual
indemnification could be detrimental to the Company, and its stockholders.
NOW, THEREFORE, the parties, intending to be legally bound,
hereby agree as follows:
1. Definitions:
(a) Agent. "Agent" means any person who is or was a director,
officer, employee or other Agent of the Company; or is or was serving at the
request of, for the convenience of, or to represent the interests of, the
Company as a director, officer, employee or Agent of another entity or
enterprise; or was a director, officer, employee or Agent of a predecessor
corporation of the Company (including, without limitation, NextCard, Inc., a
California corporation), or was a director, officer, employee or Agent of
another enterprise at the request of, for the convenience of, or to represent
the interests of such predecessor corporation.
(b) Expenses. "Expenses" means all direct and indirect costs
of any type or nature whatsoever (including, without limitation, all attorneys'
fees, costs of investigation and related disbursements) incurred by the
Indemnitee in connection with the investigation,
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settlement, defense or appeal of a claim or Proceeding covered hereby or
establishing or enforcing a right to indemnification under this Agreement.
(c) Proceeding. "Proceeding" means any threatened, pending, or
completed claim, suit or action, whether civil, criminal, administrative,
investigative or otherwise.
2. Maintenance of Liability Insurance.
(a) The Company hereby covenants and agrees with Indemnitee
that, subject to Section 2(b), the Company shall obtain and maintain in full
force and effect directors' and officers' liability insurance ("D&O Insurance")
in reasonable amounts as the Board shall determine from established and
reputable insurers, but no less than the amounts in effect upon initial
procurement of the D&O Insurance. In all policies of D&O Insurance, Indemnitee
shall be named as an insured.
(b) Notwithstanding the foregoing, the Company shall have no
obligation to obtain or maintain D&O Insurance if the Company determines in good
faith that the premium costs for such insurance are (i) disproportionate to the
amount of coverage provided after giving effect to exclusions, and (ii)
substantially more burdensome to the Company than the premiums charged to the
Company for its initial D&O Insurance.
3. Mandatory Indemnification. The Company shall defend, indemnify
and hold harmless Indemnitee:
(a) Third Party Actions. If Indemnitee is a person who was or
is a party or is threatened to be made a party to any proceeding (other than an
action by or in the right of the Company) by reason of the fact that Indemnitee
is or was or is claimed to be an Agent of the Company, or by reason of anything
done or not done by Indemnitee in any such capacity, or by reason of the fact
that Indemnitee personally guaranteed any obligation of the Company at any time,
against any and all Expenses and liabilities or any type whatsoever (including,
but not limited to, legal fees, judgments, fines, ERISA excise taxes or
penalties, and amounts paid in settlement) incurred by such person in connection
with the investigation, defense, settlement or appeal of such proceeding, so
long as the Indemnitee acted in good faith and in a manner the Indemnitee
reasonably believed to be in or not opposed to the best interests of the
Company, or, with respect to any criminal action or Proceeding, had no
reasonable cause to believe such person's conduct was unlawful.
(b) Derivative Actions. If Indemnitee is a person who was or
is a party or is threatened to be made a party to any Proceeding by or in the
right of the Company by reason of the fact that Indemnitee is or was an Agent of
the Company, or by reason of anything done or not done by Indemnitee in any such
capacity, against any amounts paid in settlement of any such Proceeding, and all
other Expenses incurred by such person in connection with the investigation,
defense, settlement or appeal of such Proceeding so long as the Indemnitee acted
in good faith and in a manner the Indemnitee reasonably believed to be in or not
opposed to the best interests of the Company; except that no indemnification
under this subsection shall be made, and Indemnitee shall repay all amounts
previously advanced by the Company, in respect of any claim, issue or matter for
which such person is judged in a final, non-appealable decision to be
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liable to the Company by a court of competent jurisdiction due to willful
misconduct in the performance of such person's duties to the Company, unless and
only to the extent that the court in which such Proceeding was brought shall
determine that Indemnitee is fairly and reasonably entitled to indemnity.
(c) Actions Where Indemnitee is Deceased. If Indemnitee is a
person who was or is a party or is threatened to be made a party to any
Proceeding by reason of the fact that Indemnitee is or was an Agent of the
Company, or by reason of anything done or not done by Indemnitee in any such
capacity, and prior to, during the pendency of, or after completion of, such
Proceeding, the Indemnitee shall die, then the Company shall defend, indemnify
and hold harmless the estate, heirs and legatees of the Indemnitee against any
and all Expenses and liabilities incurred by or for such persons or entities in
connection with the investigation, defense, settlement or appeal of such
Proceeding on the same basis as provided for the Indemnitee in Sections 3(a) and
3(b) above.
The Expenses and liabilities covered hereby shall be net of any
payments by D&O Insurance carriers or others.
4. Partial Indemnification. If Indemnitee is found under Section
3(b), 6 or 9 hereof not to be entitled to indemnification for all of the
Expenses relating to a Proceeding, the Company shall indemnify the Indemnitee
for any portion of such Expenses not specifically precluded by the operation of
such Section 3(b), 6 or 9.
5. Indemnification Procedures; Mandatory Advancement of Expenses.
(a) Promptly after receipt by Indemnitee of notice to him or
her of the commencement or threat of any Proceeding covered hereby, Indemnitee
shall notify the Company of the commencement or threat thereof, provided that
any failure to so notify shall not relieve the Company of any of its obligations
hereunder.
(b) If, at the time of the receipt of a notice pursuant to
Section 5(a) above, the Company has D&O Insurance in effect, the Company shall
give prompt notice of the Proceeding or claim to its insurers in accordance with
the procedures set forth in the applicable policies. The Company shall
thereafter take all necessary or desirable action to cause such insurers to pay
all amounts payable as a result of such Proceeding in accordance with the terms
of such policies.
(c) Indemnitee shall be entitled to retain one or more counsel
from time to time selected by him or her in such person's sole discretion to act
as his or her counsel in and for the investigation, defense, settlement or
appeal of each Proceeding.
(d) The Company shall bear all fees and Expenses (including
invoices for advance retainers) of such counsel, and all fees and Expenses
invoiced by other persons or entities, in connection with the investigation,
defense, settlement or appeal of each such Proceeding. Such fees and Expenses
are referred to herein as "Covered Expenses."
(e) Until a determination to the contrary under Section 6
hereof is made, the Company shall advance all Covered Expenses in connection
with each Proceeding. If required by law, as a condition to such advances,
Indemnitee shall, at the request of the Company, agree
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to repay such amounts advanced if it shall ultimately be determined by a final
order of a court that Indemnitee is not entitled to be indemnified by the
Company by the terms hereof or under applicable law.
(f) Each advance to be made hereunder shall be paid by the
Company to Indemnitee within 10 days following delivery of a written request
therefor by Indemnitee to the Company.
(g) The Company acknowledges the potentially severe damage to
Indemnitee should the Company fail timely to make such advances to Indemnitee.
6. Determination of Right to Indemnification.
(a) To the extent Indemnitee has been successful on the merits
or otherwise in defense of any Proceeding, claim, issue or matter covered
hereby, Indemnitee need not repay any of the Expenses advanced in connection
with the investigation, defense or appeal of such Proceeding.
(b) If Section 6(a) is inapplicable, the Company shall remain
obligated to indemnify Indemnitee, and Indemnitee need not repay Expenses
previously advanced, unless the Company, by motion before a court of competent
jurisdiction, obtains an order for preliminary or permanent relief suspending or
denying the obligation to advance or indemnify for Expenses.
(c) Notwithstanding a determination by a court that Indemnitee
is not entitled to indemnification with respect to a specific Proceeding,
Indemnitee shall have the right to apply to the Court of Chancery of Delaware
for the purpose of enforcing Indemnitee's right to indemnification pursuant to
this Agreement.
(d) Notwithstanding any other provision in this Agreement to
the contrary, the Company shall indemnify Indemnitee against all Expenses
incurred by Indemnitee in connection with any Proceeding under Section 6(b) or
6(c) and against all Expenses incurred by Indemnitee in connection with any
other Proceeding between the Company and Indemnitee involving the interpretation
or enforcement of the rights of Indemnitee under this Agreement unless a court
of competent jurisdiction finds that the material claims and/or defenses of
Indemnitee in any such Proceeding were frivolous or made in bad faith.
7. Certificate of Incorporation and Bylaws. The Company agrees
that the Company's Certificate of Incorporation and Bylaws in effect on the date
hereof shall not be amended to reduce, limit, hinder or delay (i) the rights of
Indemnitee granted hereby, or (ii) the ability of the Company to indemnify
Indemnitee as required hereby. The Company further agrees that it shall exercise
the powers granted to it under its Certificate of Incorporation, its Bylaws and
by applicable law to indemnify Indemnitee to the fullest extent possible as
required hereby.
8. Witness Expenses. The Company agrees to compensate Indemnitee
for the reasonable value of his or her time spent, and to reimburse Indemnitee
for all Expenses (including attorneys' fees and travel costs) incurred by him or
her, in connection with being a
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witness, or if Indemnitee is threatened to be made a witness, with respect to
any Proceeding, by reason of Indemnitee's serving or having served as an Agent
of the Company.
9. Exceptions. Notwithstanding any other provision hereunder to
the contrary, the Company shall not be obligated pursuant to the terms of this
Agreement:
(a) Claims Initiated by Indemnitee. To indemnify or advance
Expenses to Indemnitee with respect to Proceedings or claims initiated or
brought voluntarily by Indemnitee and not by way of defense (other than
Proceedings brought to establish or enforce a right to indemnification under
this Agreement or the provisions of the Company's Certificate of Incorporation
or Bylaws unless a court of competent jurisdiction determines that each of the
material assertions made by Indemnitee in such Proceeding were not made in good
faith or were frivolous).
(b) Unauthorized Settlements. To indemnify Indemnitee under
this Agreement for any amounts paid in settlement of any Proceeding covered
hereby without the prior written consent of the Company to such settlement.
10.Non-exclusivity. This Agreement is not the exclusive
arrangement between the Company and Indemnitee regarding the subject matter
hereof and shall not diminish or affect any other rights which Indemnitee may
have under any provision of law, the Company's Certificate of Incorporation or
Bylaws, under other agreements, or otherwise. To the extent that this Agreement
provides for rights to the Indemnitee in excess of or in addition to those
provided under any agreements signed heretofore, this Agreement cancels and
supersedes all such prior agreements.
11.Continuation After Term. Indemnitee's rights hereunder shall
continue after the Indemnitee has ceased acting as a director or Agent of the
Company and the benefits hereof shall inure to the benefit of the heirs,
executors and administrators of Indemnitee.
12.Interpretation of Agreement. This Agreement shall be
interpreted and enforced so as to provide indemnification to Indemnitee to the
fullest extent now or hereafter permitted by law.
13.Severability. If any provision or provisions of this Agreement
shall be held to be invalid, illegal or unenforceable, provisions of the
Agreement shall not in any way be affected or impaired thereby, and to the
fullest extent possible, the provisions of this Agreement shall be construed or
altered by the court so as to remain enforceable and to provide Indemnitee with
as many of the benefits contemplated hereby as are permitted under law.
14.Counterparts, Modifications and Waiver. This Agreement may be
signed in counterparts. This Agreement constitutes a separate Agreement between
the Company and Indemnitee and may be supplemented or amended as to Indemnitee
only by a written instrument signed by the Company and Indemnitee, with such
amendment binding only the Company and Indemnitee. All waivers must be in a
written document signed by the party to be charged. No waiver of any of the
provisions of this Agreement shall be imposed by the conduct of the parties. A
waiver of any right hereunder shall not constitute a waiver of any other right
hereunder.
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15. Notices. All notices, demands, consents, requests, approvals
and other communications required or permitted hereunder shall be in writing and
shall be deemed to have been properly given if hand delivered (effective upon
receipt or when refused), or if sent by a courier freight prepaid (effective
upon receipt or when refused), in the case of the Company, at the address listed
below, and in the case of Indemnitee, at Indemnitee's address of record at the
office of the Company, or to such other addresses as the parties may notify each
other in writing.
To the Company: NextCard, Inc.
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxx
With a copy to: Xxxxxx X. Star, Esq.
Howard, Rice, Nemerovski, Canady,
Xxxx & Xxxxxx, A Professional Corporation
Three Xxxxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
To Indemnitee: At the Indemnitee's residence address on the
records of the Company from time to time.
16.Evidence of Coverage. Upon request by Indemnitee, the Company
shall provide evidence of the liability insurance coverage required by this
Agreement. The Company shall promptly notify Indemnitee of any change in the
Company's D&O Insurance coverage.
17.Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Delaware.
IN WITNESS WHEREOF, the parties hereto have entered into this
Indemnification Agreement effective as of the date first above written.
NEXTCARD, INC.
By:
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Xxxxxx X. Xxxx,
Chief Executive Officer
INDEMNITEE:
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